Land transfer

obi604

Can someone tell me in simple terms about land transfer from father to son.

I know its a really convoluted process, but high level a few bullet points

How can this be done to minimize tax

I know there is the green cert course but not sure what advantage this gives......................so as you can see my knowledge is really limited

Donald Trump

Google "consanguinity relief"

Fine Day

Every case is different. You need to engage with your solicitor, account and maybe a good ag advisor.

jaymla627

https://www.boards.ie/discussion/2058325650/land-transfer

Screenshot_20231204_180351_Chrome.jpg

0% stamp duty under the above, for the process you need 2 solicitors one acting for your father and one on your behalf, your father's solicitor does the majority of the work....

Your checklist entails a 5 year business plan submitted to teagasc 180 euro for this, you also need the land valued by a auctioner and a document from them outlining the above 850 euro thereabouts

You need your greencert/birth-cert/proof of address etc and that's about it

obi604

I am over 35. Don’t have any green Cert. Work a full time job.

very little knowledge of farming. No real interest in it. (Being totally honest)

jaymla627

https://www.boards.ie/discussion/comment/121454315#Comment_121454315

You'll have no agricultural reliefs available so, bar whatever the gift limit is between a father/son you'll have a nice wallop of tax to pay depending on farm value/size

obi604

https://www.boards.ie/discussion/comment/121454336#Comment_121454336

is there any advantage on doing a land transfer now? Versus the Will where I will get the land.

Donald Trump

https://www.boards.ie/discussion/comment/121454336#Comment_121454336

Could still potentially avail of Ag Relief. The main barrier might be satisfying the asset test.

893bet

https://www.boards.ie/discussion/comment/121454345#Comment_121454345

How many acres? And are their other assests going your way (cash, house etc).

jaymla627

https://www.boards.ie/discussion/comment/121454345#Comment_121454345

Of course if your father where to go into nursing-home care, with the land still in his name the state/nursing home could have a claim on the land for the cost of his care, if his finances ment he hadn't the funds in the bank to cover his care, I'd be getting the transfer done on the above grounds alone

obi604

https://www.boards.ie/discussion/comment/121454390#Comment_121454390

45 acres. The limited machinery. Tractor etc.

n1st

Green cert is not required but can help with tax.

Active farmer will help, livestock etc.

Valuation of your own assets vs the value of the farm required to reduce tax liability. Some calculation made 80% I think i.e. if your assets are less than 1/5th of the value of the farm then you have no tax liability, else you do and it's big.

Stamp duty also required.

I don't believe there's much difference financially between gift and inheritance.

I'm just at the latter end of mine.

obi604

https://www.boards.ie/discussion/comment/121454845#Comment_121454845

so let’s say a house worth 300k and land worth 400k, I am shagged.

what is the tax that would need to be paid in this example?

n1st

The value of the farm @ 23% I think, something like 80k.

I could be wrong on the tax rate but it's on the full value of the farm.

Sheds, machinery, stock etc all added.

However there is an alternative, the 350k lifetime gift from parent to child. You can do it via this and not have anything to do with active farmer. It's just a gift from parent to child.

obi604

https://www.boards.ie/discussion/comment/121454935#Comment_121454935

thanks. What do you mean by the active farmer scenario?

n1st

https://www.revenue.ie/en/gains-gifts-and-inheritance/cat-reliefs/agricultural-relief/what-are-the-conditions-for-agricultural-relief.aspx

obi604

https://www.boards.ie/discussion/comment/121455014#Comment_121455014

So essentially you can be an active farmer if you rent and have no savings etc

893bet

https://www.boards.ie/discussion/comment/121454396#Comment_121454396

Shed etc? Any cash or house etc that can eat into your life time allowance?

The 45 acres if poorer land and no other assets or cash being inherited might have you under the life time allowance. This would allow you take ownership with no inheritance tax or stamp at death of your father/mother.

however if the land is anyway decent and there are other assets at play your life time allowance will be blown and you will have 33% to pay on top.

Waiting until death to inherit then you need to look at the bigger picture of 1) overall life time allowance and the likely value of the assets. 2) Consider how “fair deal” could play out if ever needed for your parents.

Going for the transfer now has advantages and disadvantages.

While you can get Agri relieve of 90 percent, and stamp duty relief down to 1 percent. You have you dance a few hoops, have to actively farm, and meet the asset test.

Note for the asset test if you have a house worth 400k with your wife, but owe 200k mortage. Then you only have a 200k asset of which you own 100k. You would then need the farm valued at more than 400k to meet the 80 percent test.

There are different permutations that you need to write down and calculate their impact.

obi604

https://www.boards.ie/discussion/comment/121455143#Comment_121455143

thanks. There are a few sheds, tractor, plough, harrow, transport box etc

I presume money in the bank counts as an asset and I presume any money my wife has in the back counts as an asset?

it’s ok land. Bout 5 acres of boggy stuff and realistically only 20 acres really suitable for silage or tillage etc. as of now. Maybe 10 more could be if re seeded etc.

not sure what you mean by “life time allowance”

ismat

You can claim business relief on the farm assets and get the same 90% value reduction for CAT. Claim congansuity relief to get the stamp duty to 1% on the transfer value.

obi604

https://www.boards.ie/discussion/comment/121455298#Comment_121455298

You have lost me now 😬😬

mickdw

I went through this and basically you need to satisfy asset test which you either meet or you don't. 80 percent of assets after inheriting must be farm assets.

You can lease to active farmer to get relief if you are working full time.

ismat

You don’t need to satisfy the ag relief test to get the 90% reduction in value for CAT purposes. It you are under 35 and have the green cert then the ag relief removes the stamp duty entirely and gives you the 90% value reduction. If you can’t meet this test you are entitled to pay 1% stamp duty on a transfer of farmland from parent to child. You can also claim business relief on the asset value.

893bet

https://www.boards.ie/discussion/comment/121455269#Comment_121455269

To satisfy the means test all assets need to be valued. Wife’s money if in her name only is not relevant. 50 percent of joint accounts only….and plan ahead……I

Life time allowance means how much you can be gifted or inheritance from a parent. 335k is the number. Above that is taxed at 33%.

Do some reading. It’s not that complicated

obi604

https://www.boards.ie/discussion/comment/121455344#Comment_121455344

I am NOT under 35. and I Never did the green cert.

ismat

In that case you pay the 1% stamp on the transfer and claim the 90% reduction for business relief. Should be no tax due bar minimal stamp duty on a transfer to you assuming you have not taken a previous gift from your parents

Donald Trump

It's probably not too difficult to satisfy the asset test given that you can plan in advance. You would have options such as investing some of your own savings into land first if you needed to.

obi604

https://www.boards.ie/discussion/comment/121455396#Comment_121455396

Sorry. What do you mean by 90% reduction for business relief? Specifically the word business

obi604

https://www.boards.ie/discussion/comment/121455413#Comment_121455413

a lot of things I don’t get on this thread - sorry. 😔

how does investing savings in land improve things?

ismat

The value of the assets being transferred to you are reduced by 90% before capital acquisitions tax is calculated. You can receive a gift or inheritance up to 335k from a parent tax free. The 90% reduction means that if you get farm assets worth say 500k and if they qualify for either ag relief or business relief then for cat purposes they are valued at 90% less or 50 k in this example. You would pay no tax in this instance as you have not exceeded the 335k threshold

Donald Trump

https://www.boards.ie/discussion/comment/121455453#Comment_121455453

The asset test means that 80% of your assets have to be in agricultural assets on the day you inherit.

If your assets consist only of savings of 1m in the Bank, then the assets you inherit must be valued at over 4m to avail of the relief

If you spend 500k of that 1m in advance on your own agricultural assets, then the assets you inherit have to be valued at over 1.5m. If you spent 600k, then you only have to inherit 1m and so on etc.

If you think there is a chance that you will ever sell the land, your strategy is to get the Ag Relief and have Revenue accept a valuation as high as possible. With the Ag Relief you can inherit over 3m with no CAT.

I assume for transfers, the downside would be the 1% SD. Not 100% certain of the inter vivos transfers bit.

obi604

https://www.boards.ie/discussion/comment/121455495#Comment_121455495

Don’t get the 600k bit.

Donald Trump

https://www.boards.ie/discussion/comment/121455523#Comment_121455523

Simple maths.

If you have 1m, spend 600k on (say) land, then you have 400k non-ag assets left.

Suddenly you inherit 1m ag assets. You now have 1.6m ag assets and 400k non-ag.

Asset test passed

obi604

https://www.boards.ie/discussion/comment/121455533#Comment_121455533

But is this applicable to the 1M and 4M example you gave.

Sheep breeder

Best advice go and talk to a solicitor, who will point you in the right direction and the best money you will spend.

Donald Trump

https://www.boards.ie/discussion/comment/121455596#Comment_121455596

I don't know what you are asking me. It's maths. The asset test is one of the conditions for Agricultural relief - Ag Relief means Revenue will treat your inheritance as if it was 10% of the real figure if you satisfy all the conditions.

If you have 1m of non-ag assets today and you inherit 4m of ag assets tomorrow, then your total assets tomorrow will be 5m and 80% of those will be ag assets and you will pass the asset test.

If you have 1m of non-ag assets today and you inherit 3.9m of ag assets tomorrow, then your total assets tomorrow will be 4.9m and 79.59% of those will be ag assets and you will not pass the asset test.

kollegeknight

https://www.boards.ie/discussion/2058325650/land-transfer

Hi Op,

if I were you, I would talk to Aisling Meehan from Newmarket on Fergus in east Clare. Afaik, she does online meetings if it’s too far for you.

She is an accountant and solicitor, writes for Farmers journal.

Not cheap for consultancy but genuinely the best person I spoke to and worth every penny.

i ended up using her as solicitor as my mother and I would have had the same solicitor prior.

Mooooo

OP, talk to an ag accountant and solicitors, ideally get quotes from all esp the solicitors for any work to be done. Your father's ones might do

They would have done this all before. There are prob local accoubtsnts out there but FDC and IFAC would be practices active in most areas if you want more well known

obi604

Thanks for all the comments and help.

Really high level without even mentioning words such as consanguinity relief, stamp duty, agricultural reliefs, CAT, CGT etc etc

Lets say I have assets of 400k and the farm and machinery etc are worth 400k. I could potentially have a big tax bill to pay.  Something like 80k or so, but not entirely sure.

Like a lot of Irish families, we don't like talking about money and more so talking about land and land ownership.

We rarely talk about it openly but I need to talk to my mother and father (my father more so) and say look if we sit on our hands now and do nothing, I could essentially get hit with a tax bill of 80,000 euro.

My father did this exercise 50 years ago when there was very little red tape and now does not understand this or will just ignore it.

I just need to try and tell him I could get lumped with a big tax bill here, does the 80k sound about right based on above? At least if I have a figure for him, he will understand the seriousness of this and if he hears 80k it will resonate with him

ABitofsense

https://www.boards.ie/discussion/comment/121456517#Comment_121456517

I have this process done in the last couple of years. You need to speak to a GOOD solicitor who know their stuff and an Agri Accountant. There is loads of way to reduce the tax bill for you and any impact to your father too. Every farm situation is different. I only ended up paying 1% tax.

SodiumCooled

https://www.boards.ie/discussion/comment/121455269#Comment_121455269

Money in your account counts, money in a joint account counts at 50%, money in your wife’s sole accounts don’t count.

in other words all savings etc should be moved to an account with only your wife’s name. I know of someone who had to put their house into their wife’s name only to meet the criteria and doing this availed of the relief without issue.

As mentioned big advantage doing it now is avoiding the fair deal scheme and also if you are interested in farming it’s good to be getting more involved and getting to grip with the finances.

You should consider doing the green cert it makes getting the 90% cat reduction much easier.

arrowman

As already mentioned - get talking early to your accountant and your solicitor and set out what you are planning. Get an assessment done on the total costs of the transfer including fees and any potential taxes so that you don't get any shocks after the event.

It usually makes sense to get a transfer done as a gift if taxes can be managed.

Also have a look at the Teagasc website for their Succession & Inheritance information - https://www.teagasc.ie/rural-economy/farm-management/succession--inheritance/

A useful 3-page summary here - https://www.teagasc.ie/publications/2022/transferring-the-family-farm---what-do-i-need-to-know.php

and a webinar outlining the taxes here (this is from 2020 but still fairly relevant) -

https://www.youtube.com/live/JkDg8qETkEw?si=_iTRILFIJfJTfmrs&t=2526

leex

If you incurred debt for a transfer, what is the most tax efficient way of handling this?